Sarkuysan Elektrolitik Bakir Sanayi ve Ticaret : 2023 Yılı Faaliyet Raporu

ANNUAL REPORT OF THE BOARD OF DIRECTORS OF SARKUYSAN ELEKTROLİTİK BAKIR SANAYİ VE TİCARET A.Ş. FOR THE PERIOD OF 01.01.2023 - 31.12.2023 PREPARED WITH RESPECT TO THE COMMUNIQUE SERIAL: II-14.1 OF THE CAPITAL MARKETS BOARD

The Sarkuysan Identity

Company Name	: Sarkuysan Elektrolitik Bakır Sanayi ve Ticaret A.Ş.
Founded on	: 03.05.1972
Upper Limit of the Registered Capital	: 600,000,000.-TL
Issued Capital	: 500,000,000.-TL
Trade Registry Number	: 13898
Mersis No	: 0751001576100014
Commercial Registry Registered to	: Gebze Commercial Registry Office
Address	: Emek Mahallesi Aşıroğlu Caddesi No: 147
	41700 Darıca / KOCAELI
Phone Number	: (0 262) 676 66 00 (20 lines)
Fax Number	: (0 262) 676 66 80
	(0 262) 676 66 81
	(0 262) 676 66 83
E-mail	: [e-mail]
Website	: www.sarkuysan.com

Sarkuysan Annual Report 2023

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History

The Company has a significant place in the country's industrialization history as it is the first successful publicly traded and aggregate company. The Company, which produces electrolytic copper products, copper tubes and copper busbars over an area exceeding 200,000 m² in the Gebze, Tuzla and Darıca regions, with an indoor area of approximately 90,000 m², increased its initial capacity of 10,000 tons/year to over 200,000 tons/year and became a global company. The products are used as standard inputs in electro-technical, electronics, motor, communication, electricity generation and distribution, solar power, household appliances, measuring devices, defense, automotive, chemicals, construction, heating ventilation and sanitary installation sectors. Sarkuysan is certified with TS EN ISO 9001, IATF 16949 Quality, ISO 14001 Environment, ISO 45001 Health and Safety, and ISO 50001 Energy Management systems for all the operations carried out. Using the "sks" brand on its products, Sarkuysan meets a substantial part of the domestic demand while exporting approximately half of its production range to more than 70 countries on 5 continents. Today, a significant number of the cars and commercial vehicles produced in Europe use Sarkuysan wires. The Company has been providing oxygen-free and nickel-plated copper wires to the suppliers of NASA in the USA for years as well as the aircraft manufacturers lately.

Sarkuysan manufactures a significant portion of its own machinery and plants used during the manufacturing process. Moreover, generating a considerable portion of the power and steam requirement of the Company vital for the production consistency at the co-generation plant within its premises, the Company also offers its 50 years of experience and know-how to other countries.

Sarkuysan is a group of companies.

SARMAKINA A.Ş., operating in machinery and spare parts manufacturing and environmental protection technologies field; DEMISAŞ A.Ş., producing pig and nodular cast iron for automotive and machinery manufacturing sectors; SARDA A.Ş., a marketing and trade company; and BEKTAŞ A.Ş. are the sister companies in the group. Sarkuysan has an agency in Italy where is an important country for direct marketing purposes of the products as part of the Company's busy export operations. In addition, Sarkuysan has become a pioneering Turkish industrial organization in the USA with SARK-WIRE, a subsidiary which began production in Albany, New York as from the end of 2009, and the completion of the two manufacturing plants constructed in Toccoa, Georgia; and in BULGARIA with Sark Bulgaria factory, which was established in Shumen on 10.06.2016 and put into operation for production in 2019.

Furthermore, Sarkuysan facilities located at the Aegean Free Trade Zone manufacture and export products with high added value.

Having approximately 1,272 employees in total, approximately 90% of the personnel of the group of companies working in the production units have either vocational school or high school degrees, and they are provided in-house and outsourced training programs every year.

Being aware of its social responsibilities, Sarkuysan continuously develops social projects in all fields. For example;

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Frej Han, which was renovated and used as the Company Headquarters for several years, is an important contribution to our cultural legacy. The Company contributes to education by building the Sarkuysan High School in Gebze and the Sarkuysan Elementary School in Darıca and by granting non- refundable scholarships to higher education students. Sarkuysan also supports State Religious Affairs with the Sarkuysan Mosque inspired by and constructed as an Ottoman Architectural complex. Contributing to the health sector by allocating the funds reserved at the beginning of the year for the urgent medical device requirements of a healthcare institution, the Company also supports sports with its Table Tennis Team that frequently represents Türkiye successfully in the European Cup Championship. Contributing to arts with its Turkish Music Choir, Folk and Modern Dance Groups composed of its employees, the Company pays utmost attention to the environment by developing forestation areas. And last but not least, Sarkuysan promotes our country by hosting international events.

At a corporation, with approximately 20,000 shareholders, Sarkuysan supplies materials to numerous sectors in the domestic and international markets under the "sks" trademark for the production of many modern industrial products; facilitates and colors life and creates substantial added value with significant employment opportunities; brings foreign currencies to the country, pays taxes, and distributes profits. Sarkuysan is a dynamic, global, publicly held corporation with modern means of production and corporate organization governed by professionals.

Board of Directors

Name Surname	Position	Date of Election
Hayrettin ÇAYCI	Chair	07.04.2023
Hamit MÜCELLİT	Acting Chair	07.04.2023
A. Hamdi BEKTAŞ	Member of the Board	07.04.2023
Cenap TASKIN	Member of the Board	07.04.2023
Turgay SOHOGLU	Member of the Board	07.04.2023
Bekir MENETLİOĞLU	Member of the Board	07.04.2023
Fatma Burcu CESUR	Member of the Board	07.04.2023
Diana Manuş URUN	Member of the Board	07.04.2023
İpek ÖZCAN	Member of the Board	07.04.2023
Ayhan ZEYTİNOĞLU	Independent Member of the Board	07.04.2023
Virma SÖKMEN	Independent Member of the Board	07.04.2023
Ilfeta AKSOY	Independent Member of the Board	07.04.2023
Mehmet Ali YILDIRIMTÜRK	Independent Member of the Board	07.04.2023
Mehmet Nazmi ERTEN	Independent Member of the Board	07.04.2023

Authorizations

Members of the Board: Members of the Board were determined pursuant to the Turkish Commercial Code, the Capital Market Board Regulations, and the Company's Articles of Association.

Independent Members of the Board: Independent Members of the Board were determined pursuant to the Capital Market Board Regulations and the Company's Articles of Association.

Terms of Duties: In accordance with the decision taken in the Ordinary General Assembly meeting dated 07.04.2023, the term of duty for the members of the Board is 3 (three) years and in accordance with the decision taken in the Ordinary General Assembly meeting dated 07.04.2023, the term of duty for the Independent Members of the Board is 1 (one) year.

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Senior Management

Sevgür ARSLANPAY	Managing Director & CEO - Chemical Engineer
Ümit ULUÇAM	Vice President (Financial) - Business Administrator
Metin YARAŞ	Vice President (Commercial) - Public Administrator
Tolga EDIZ	Vice President - Metallurgical Engineer, MSc.
Aleattin KULAKLI	Acting R&D Manager - Economics and Administrative
	Sciences
Sabri ATILLA	Administrative Affairs Manager - Administrator (Trainer)
Canan ÇAKIROĞLU	Quality Assurance Manager - Physics Engineer, MSc.
Çağatay ÇAPAL	Enameled Wire Production Manager - Electronics
	Engineer
Şefiye DURMAZ YAYLA	Commercial Accounting Manager - Business
	Administrator (CAFA)
Murat DEMIR	End Products Unit 1 - Metallurgical Engineer
Ramazan Barış DOĞAN	End Products Unit 2 - Metallurgical Engineer
Faruk Şekip KARŞANBAŞ	Industrial Automation and Maintenance Manager -
	Electronic Engineer, MSc.
Meryem KAYA	Export Operations Manager - Business Administrator
Levent Ş. KULAÇ	Procurement Manager - Metallurgical Engineer
Serkan ÖZGEN	Domestic Sales Manager - Business Administrator
S. Sinan SELVI	Director of the Continuous Casting - Metallurgical
	Engineer, M.Sc.
Yaşar SÖNMEZ	Constructions Manager - Civil Engineer
Filiz TEKIN SALMANLI	IT Systems Manager - Industrial Engineer
Mete TARHAN	Tube Plant Manager - Mechanical Engineer
Ferhan TURNAGIL	Cost Accounting Manager - Business Administrator (CAFA)
Ercan USER	Domestic Marketing Manager - Marketing Expert
I. Deniz UZGAN	Financing and Risk Management Manager - Economist
Emin YÜKSEL	Human Resources Manager - Educational Sciences
M. Mahir YILDIZ	International Marketing Manager - Foreign Trade Expert
	(Mathematician)

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Capital Structure

Whilst the closing price of our stocks on Borsa Istanbul was listed 25.10 TL on 31.12.2022; as of 31.12.2023, the price was 28.28 TL by an increase of 12.67%.

With the resolution of the Board of Directors dated 28.01.2021, and approval of the Capital Markets Board dated 17.02.2021 and numbered E-29833736-110.04.04-1947, the registered capital of our Company was increased by 100% from TL 300,000,000.- to TL 600,000,000.-.

The issued capital of 400,000,000.-TL of the Company within the registered capital ceiling of 600,000,000.-TL, was increased by 25 %, which corresponds to 100,000,000.-TL, to 500,000,000.-TL as part of article 6 of our Company's Articles of Association in line with the Dividend Distribution resolution made at the Ordinary General Assembly Meeting of our Company held on 07.04.2023. The related process was completed on 04.07.2023 and announced in the Turkish Trade Registry Gazette dated 10.07.2023 and numbered 10867.

Shares representing capital
Type of Share	Paid-in Capital	Number of	The Portion of Shares in
Certificate	TRY	Shares	the Capital %
Group A Registered	25.00	2,500	0.000005
Shares
Group B Bearer	499,999,975.00	49,999,997,500	99.999995
Shares
Total	500,000,000.00	50,000,000,000	100.00000

As of 31.12.2023, the shares of our members of the Board in the Company's capital are as follows; Mr. Hayrettin ÇAYCI has 9.57%, Mr. A. Hamdi BEKTAŞ has 3.00%, Mr. Turgay ŞOHOĞLU has 1.30%, Mr. Bekir MENETLİOĞLU has 0.54% and Mr. Cenap TAŞKIN has 2.41%. The shares of other members of the board are less than the aforementioned shares. Mr. Şükrü KILIMCI and Mr. Ibrahim KILIMCI hold the highest number of shares of the company with 7.89% and 5.4% of our capital, respectively.

The percentage of shares of the company in actual circulation was 81.89% on 31.12.2022 and 81.61% on 31.12.2023.

Results of 5-Year-Long Activities

(thousand TL)	2019	2020	2021	2022	2023
Registered Capital	300,000	300,000	600,000	600,000	600,000
Issued Capital	200,000	300,000	300,000	400,000	500,000
Total Par Value of Shares	4,268	4,268	4,268	4,268	5,335
Total Par Value of Bonus Shares	195,732	295,732	295,732	395,732	494,665
Capital Increase (%)	-	50	-	33.3333334	25
Stock Price (TL) (As of the end of the year)	3.18	8.70	19.80	31.62	28.28
Addition of Fixed Assets Over the Year	16,540	8,956	30,500	47,376	130,574
Total Amount of Dividends Distributed (gross)	50,000	18,900	75,000	100,000	100,000
Total Amount of Dividends Distributed (net)	42,500	16,065	63,750	85,000	90,000
Dividend Rate (gross) (%)	25	9.45	25	30	25
Dividend Rate (net) (%)	21.25	8.0325	21.25	27	22.50

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General Information

This report herein covers the period between 01.01.2023 and 31.12.2023. During this period, important developments related to the Company were disclosed on the Public Disclosure Platform (PDP) as well as to investors through our website.

The Ordinary General Assembly Meeting regarding 2022 activities of the Company was held on 07.04.2023 at the Company Headquarters. In this meeting, shares composing 78.74% of our capital were represented, whereby members of the Board were released from their duties and all of the agenda items were discussed and resolved.

With the resolution of the Board of Directors dated 27.01.2022 and numbered 1647/22.02, it was decided to submit the amendment text to the article 8, titled "Board of Directors", of our Articles of Association, to the General Assembly regarding an amendment in the number of Members of the Board of Directors in order to be able to adapt the group changes, in accordance with the provisions of the Turkish Commercial Code No. 6102 and the Capital Market Law No. 6362. The required application related to this resolution was submitted to the Capital Markets Board on 11.02.2022.

Our application regarding the amendment of Article 8 of the Articles of Association of our Company, titled "Board of Directors", was approved by the Capital Markets Board's letter dated 04.03.2022 and numbered E-29833736-110.03.03-18138; hence, the number of Independent Members of the Board of our Company was increased to five.

As a result of the election held in our General Assembly dated 07.04.2023, Mr. Ayhan ZEYTINOGLU, Mr. Mehmet BAHTİYAR, Ms. Virma SÖKMEN, Ms. Ilfeta AKSOY, Mr. Mehmet Ali YILDIRIMTÜRK and Mr. Mehmet Nazmi ERTEN were elected as independent members of the board to serve for 1 year.

Electronic General Assembly Meeting provisions stated in Article 1527 of Turkish Commercial Code began implementing in 2013 and, besides attendees in the meeting room; the shareholders who fulfilled the required procedures in advance attended the General Assembly Meeting held online on 07.04.2023.

In the fiscal period of 2023, we distributed 25.00% gross, 22.5% net cash dividend and 25% dividend in the form of shares to our shareholders from the 2022 profit. In this case, the net 0.2250 TL cash dividend was paid to share certificates with a nominal value of 1 TL. The dividend was distributed on 12.06.2023. In addition, the dividend distribution process in the form of shares of TL 100,000,000 at a rate of 25% from the profit of 2022 was completed on 04.07.2023.

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Financial Status

Key Financial Indicators	2023	2022	+/-
			Change
			%
(thousand TL)
Total Assets	16,428,438	15,747,043	4,33
Shareholders' Equity	6,554,708	5,377,146	21,90
Total Sales (Net)	45,302,003	53,253,039	14,93

Financial Ratios

	31.12.2023	31.12.2022
Liquidity Ratios
Current Ratio (Current Assets/Short Term Liabilities)	1.45	1.37
Acid Test Ratio (Current Assets-Inventory/Short Term Liabilities)	0.87	0.87
Operational Efficiency Ratios
Asset Turnover (Net Sales/Total Assets)	2.76	3.38
Account Receivable Turnover (Net Sales/Short-Term Trade	9.20	9.14
Receivables)
Inventory Turnover (Cost of Goods Sold/Inventories)	8.88	11.73
Accounts Receivable Collection Period (360/Account Receivables	39	39
Turnover Rate)(Days)
Term of Inventory Sales (360/Inventory Turnover)(Days)	41	31
Inventory Collection Period (Days)	80	70
Financial Ratios
Total Liabilities/Shareholders' Equity	1.51	1.93
Total Liabilities/Total Assets	0.60	0.66
Short-term Liabilities/Total Assets	0.51	0.57
Shareholders' Equity/Total Assets	0.40	0.34
Profitability Ratios	01.01.2023-31.12.2023	01.01.2022- 31.12.2022
	%	%
Return on Assets (Income Before Tax/Total Assets)	10.79	9.70
Return on Equity (Income Before Tax/Equity)	27.03	28.40
Operating Profit Margin (Operating Profit/Net Sales)	6.16	3.08
Profit Margin (Income Before Tax/Net Sales)	3.91	2.87

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Subsidiaries and Affiliates

Demisaş Döküm Emaye Mamulleri San. A.Ş.

The factory of Demisaş A.Ş., which is founded in 1974, is in Bilecik. The casting plants, cupola furnaces and induction furnaces are used for melting and the production takes place in 3 automatic casting lines. There is also a "Machining Workshop" for processing and selling pig and nodular cast iron parts which are produced in the plant. It manufactures compressor parts with hermetic pistons , components for spiral lobe compressors for the white goods sector; brake discs (nodular cast and grey cast iron), airbrake discs, brake drums, flywheels, exhaust manifolds, pulleys, brake cylinders, various brackets and parts, brake safety parts for automotive sector; pump housings for the water system sector;, compressor housings and brake safety parts for the heavy vehicle sector, rail junction parts for the railway sector and scaffolding connectors for the construction sector. Annual production capacity is 80,000 tons. As of 31.12.2023, approximately 31% of the production output is exported particularly to the Western European countries. Stocks of our affiliate are listed on Borsa Istanbul. The registered equity ceiling is 200,000,000.- TL and its paid-up capital is 100,000,000.- TL. Our shareholding in Demisaş is 44.44%.

Sar Makina San. ve Tic. A.Ş.

Founded in 1991, Sarmakina successfully provides service to domestic and international markets, particularly in; Wire drawing, Bunching, Coil winder and Tin plating lines, Pay-offs, Rewinding Machines, Spooler, Various Emulsion Systems, Band Filters, Steel Reels, Reel Equipment for Wire Cable sectors, as well as Copper, Al Flexible and Solid Busbar and Insulated Conductors used in Electromechanic industry (Kraft, Satin, Dennison, Mylar, Mica, Nomex, etc. are used as insulation materials) for the energy sector. Busbar solutions include flexible connection busbar, welded solid busbar, macaron insulated tin/silver coated profiles, pipes, and rods as well as tailor-made busbar processed and produced in line with the requirements of the customers. The capital of Sarmakina A.Ş. is 50,000,000.-TL in which our share is 99%.

Sarda Dağıtım ve Tic. A.Ş.

Established in 1979 in Istanbul, Sarda A.Ş. carries out some of the promotion and marketing operations for our products. It also imports, exports, and distributes the products that are within its field of activity. The capital of Sarda A.Ş. is 30,000,000.- TL in which our share is 99.97%.

Bektaş Bakır Emaye Kablo San. ve Tic. A.Ş.

Our company and Sarda A.Ş. have shareholdings of 70.71% and 29.13%, respectively, in the company, which ceased its operations in 2003 with a capital of 5,500,000.- TL.

Bemka Kupferlackdraht GMBH

The Company was founded to conduct a portion of the promotion and marketing activities for the products of Türkiye's leading enameled winding wire producers, Bemka A.Ş., which was founded in 2002. Our Company merged with Bemka A.Ş. as of 22.12.2016. Bemka Kupferlackdraht GMBH with an equity of 500,000 EURO has an affiliated partnership of 99.60% with our company.

Sark Wire Corporation

Sark Wire Corp., which was established in 2008 and has been operating in Albany, New York, the USA, since 15.12.2009, produces electrolytic copper wire and other electrolytic copper wire products with high added value at its factory equipped with the latest technology machinery and equipment. An additional factory was established in Georgia to reduce transport costs and deliver products to customers more quickly.

The merger of Sark-Wire that operates in the USA and which we own 60% of its capital, and Sark-USA, which we own 100% of its capital under Sark-Wire was decided by the boards of directors of the companies. The legal procedures in the USA were completed regarding the merger and the merger was

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certified on 15.05.2019. Following the merger, Sarkuysan A.Ş. has 73.34% of Sark Wire Corp; while Sarmakina A.Ş. and Bektaş A.Ş. have 14.54% and 12.12% of the company shares, respectively.

Sark Bulgaria AD.

Sark Bulgaria AD. was established on 10.06.2016 in Shumen, Bulgaria, to be able to benefit from the advantages offered by the European Union in exportation and expand the activities of the company. Our company has 90% share and Sarmakina A.Ş. has 10% share in Sark Bulgaria AD., which has a registered capital of 12,000,000 Leva. The investment process of the Company was completed, and the production period has been initiated.

CRW Metal Sanayi ve Ticaret A.Ş.

We hold 42.50% of the shares in the CRW Metal Sanayi ve Ticaret A.Ş., which was established to operate in any and all kinds of metal production, marketing, and retail activities, with a capital of 300,000,000 TL, in order to evaluate the opportunities that may arise in the near future and to establish collaborations and carry out investments in relevant sectors.

Subsidiaries and Affiliates According to Years

(thousand TL)	2019	2020	2021	2022	2023
Demisaş Döküm Emaye Mamulleri Sanayi A.Ş.
Paid-in Capital	52,500	52,500	52,500	100,000	100,000
Participation Share	23,331	23,331	23,331	44,440	44,440
Participation Rate (%)	44.44	44.44	44.44	44.44	44.44
Bektaş Bakır Emaye Kablo Sanayi ve Tic. A.Ş.
Paid-in Capital	5,500	5,500	5,500	5,500	5,500
Participation Share	3,889	3,889	3,889	3,889	3,889
Participation Rate (%)	70.71	70.71	70.71	70.71	70.71
Sarda Dağıtım ve Tic. A.Ş.
Paid-in Capital	15,000	15,000	15,000	30,000	30,000
Participation Share	14,996	14,996	14,996	29,991	29,991
Participation Rate (%)	99.97	99.97	99.97	99.97	99.97
Sar Makina San. ve Tic. A.Ş.
Paid-in Capital	10,000	20,000	20,000	50,000	50,000
Participation Share	9,900	19,800	19,800	49,500	49,500
Participation Rate (%)	99.00	99.00	99.00	99.00	99.00
CRW Metal Sanayi ve Ticaret A.Ş.
Paid-in Capital					75,000
Participation Share					31,875
Participation Rate (%)					42.50
(thousand US$)	2019	2020	2021	2022	2023
Sark - USA, Inc.*
Paid-in Capital	-	-	-	-	-
Participation Share	-	-	-	-	-
Participation Rate (%)	-	-	-	-	-
Sark Wire Corp.
Capital	15,575	15,575	15,575	15,575	15,575
Paid-in Capital	15,575	15,575	15,575	15,575	15,575
Participation Share	11,422	11,422	11,422	11,422	11,422
Participation Rate (%)	73.34	73.34	73.34	73.34	73.34
(thousand Leva)	2019	2020	2021	2022	2023
Sark Bulgaria AD.
Capital	8,000	8,000	8,000	8,000	12,000
Paid-in Capital	8,000	8,000	8,000	8,000	12,000
Participation Share	7,200	7,200	7,200	7,200	10,800
Participation Rate (%)	90	90	90	90	90
(thousand Eur)	2019	2020	2021	2022	2023
Bemka Kupferlackdraht Gmbh
Paid-in Capital	500	500	500	500	500
Participation Share	498	498	498	498	498
Participation Rate (%)	99.60	99.60	99.60	99.60	99.60
		Sarkuysan Annual Report 2023	9

• The legal requirements regarding the merger of Sark-Wire that operates in the USA and which we own 60% of its capital, and Sark-USA, which we own 100% of its capital under Sark-Wire were completed and the merger was certified on 15.05.2019.

Activities in 2023

INVESTMENTS

Our Company continued its investment activities in 2023. Our investment activities were especially focused on high value-added products taking into account the intense competition in the global sector and the new technological trends. The utmost care was given so that the machinery and plants commissioned during the year possess the latest technologies. Thanks to these investments, the product range was broadened contributing positively to meeting customer requirements.

PRODUCTION ACTIVITIES ABROAD

The "Sark Wire Corporation", established in New York and Georgia states of the USA, of which 73.34% is owned by our Company, produces in accordance with the requirements of the ISO 9001 Quality Management System Certificate it possesses with high quality products with growing product variety, competitive prices, short delivery terms and a focus on customer satisfaction in the North American market.

Sark Bulgaria AD was founded in Shumen, Bulgaria in 2016 in order to expand our Company's operations in the European Union. Serial production of Sark Bulgaria began around mid-2019. Production increases and continues.

INFORMATION ON PRODUCTION

Sarkuysan was founded in Istanbul in 1972 to produce electrolytic copper and products. The premises of the Company are located on an area of over 200,000 sq. meters in Gebze/Osmangazi, Tuzla and Darıca, which are around 45 km away from Istanbul. Sarkuysan, which has an annual production capacity of over 220,000 tons, ensures having environmentally friendly production processes at its plants which are equipped with modern environmental protection technologies. Sarkuysan has been adding value to our country's economic and social life since 1972 with its multi partner and professional management structure, subsidiaries, and affiliates, approximately 20,000 shareholders and social responsibility projects. In 2023, the Sarkuysan Group reached a retail amount of 186,312 tons of products.

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